SPND update: SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act
Date of Report: December 27, 2004
(Date of Earliest Event Reported)
SPINDLETOP OIL & GAS CO.
(Exact name of registrant as specified in its charter)
Texas 0-18774 75-2063001
(State or other jurisdiction of (Commission File No.) (IRS Employer or ID #)
incorporation or organization)
331 Melrose, Suite 102
Richardson, Texas 75080
(Address of principal executive offices)
(972) 644-2581
(Registrant's telephone number, including area code)
Section 2 - Financial Information
Item 2.01. Completion of Acquisition or Disposition of Assets
On December 27, 2004, Spindletop Oil & Gas Co. ("the Company") entered into
an "Assignment of Contract" as Assignee, with Giant Energy Corp as "Assignor"
whereby the Company acquired the rights of the Assignor in the Assignor's
Contract dated September 30, 2004 between the Assignor as Purchaser, and Jose
Montemayor, Receiver for Colonial Casualty Insurance Company as Seller. The
Contract is a customary real estate purchase contract. On the same date, the
Company closed such contract and acquired a small office building. The
property acquired is a two story multi-tenant, garden office building with a
sub-grade parking garage. The 20 year old building contains approximately
46,286 rentable square feet and sits on a 1.4919 acre block of land situated
in far north Dallas, Texas in close proximity to hotels, restaurants and
shopping areas with easy access to Interstate Highway 635 (LBJ Freeway). The
Company intends to occupy approximately 8,668 square feet of the building as
its primary office headquarters, and to lease the remaining space in the
building to non-related third party commercial tenants at prevailing market
rates.
The office building and associated land was acquired for a purchase price of
$2,038,000. The principal followed in determining the purchase price was an
arms length negotiation between a willing buyer and a willing seller. The
purchase price was funded with $238,000 of the Company's cash, and a loan
from JPMorgan Chase Bank NA in the amount of $1,800,000.
Giant Energy Corp. is a Texas corporation owned 100% by Chris G. Mazzini, the
President and Chairman of the Board of Directors of Spindletop Oil and Gas
Company, and a majority owner of the stock of the Company.
Item 2.03. Creation of a Direct Financial Obligation
On December 27, 2004, the Company as the borrower entered into a Business Loan
Agreement ("the Loan") with JPMorgan Chase Bank, NA ("the Lender") in the
amount of $1,800,000.00, the proceeds to be used in the acquisition of the
office building and related property described in Section 2, Item 2.01 above.
Terms of the Loan require repayment in 180 monthly payments consisting of
$10,000 principal plus all accrued unpaid interest due at the end of each
payment date. The Loan has a variable annual interest rate based upon an
index which is the Treasury Securities Rate for a term of seven years plus
2.20%. The interest rate is subject to change on the first day of each seven
year anniversary after the date of the note based on the Index then in effect.
As of the date of the Loan, the annual interest rate was 6.05%.
The Loan may be prepaid in whole or in part, subject to a prepayment penalty
if paid in full more than six calendar months prior to its maturity date. In
such an event, the prepayment premium will be equal to the prepaid principal
multiplied by 1.0%, further multiplied by the number of full years plus one
for any additional part of a year between the prepayment date and the earlier
of (i) the next scheduled rate change date, or (ii) the maturity date. In no
event will the prepayment percentage exceed 5% of the prepaid principal.
The Loan is secured by the building and related property. In addition, the
Loan has been guaranteed by Giant Energy Corp. and by Chris G. Mazzini and
Michelle H. Mazzini, related parties. Giant Energy Corp. owns approximately
78.8553% of the outstanding common stock of the Borrower. Mr. Mazzini owns
100% of the common stock of Giant Energy Corp., and approximately 0.5167% of
the Borrower's common stock individually.
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EXCELLENT LEVERAGE OF COMPANY CASH - LOOKS LIKE THEY WILL HAVE ABOUT 38000 SQ FT TO LEASE. DO THE NUMBERS - I SEE MORE CASH FLOW TO THE BOTTOM LINE.
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